Mortgages Rise Despite Stagnant Israeli Real Estate Market
Translated & summarized from Maariv by baba
Israeli banks disbursed NIS 31.1 billion in mortgages in Q3 2026, a 17% increase from the previous quarter, despite falling apartment prices and high inventory. The average mortgage amount rose, and the Prime rate option gained popularity. However, the housing market saw a 1% dip in sales in August, with a continued decline in second-hand apartment transactions. Apartment prices dropped 0.6% in July, contributing to ongoing pressure on the real estate sector.
The story in 5 lines · by baba
- Israeli banks issued NIS 31.1 billion in mortgages in Q3 2026, a 17% quarterly increase.
- Apartment prices in Israel fell 0.6% in July, with an 1.8% annual decline.
- The inventory of unsold new apartments remained high at 85,700 units in August.
- Overdue mortgage payments reached NIS 4.2 billion, though down from their peak.
- Year-to-date mortgage lending for housing increased by 12% compared to 2025.
Despite a slowdown in the housing market, Israeli banks issued NIS 31.1 billion in mortgages in the third quarter of 2026, a significant increase from the previous quarter. This surge in lending occurred while apartment prices continued to fall and the inventory of unsold homes remained high. The total value of overdue mortgage payments reached NIS 4.2 billion.
While September saw a 20% month-over-month decrease in mortgage disbursements to NIS 8.7 billion, this was attributed to the High Holidays. However, on a year-to-date basis, mortgage disbursements for housing reached NIS 88.3 billion, a 12% increase compared to the same period in 2025. The annual pace of lending remains near record highs seen in 2021 and 2022.
The average mortgage amount has also increased, reaching approximately NIS 1.08 million in early 2026, with a notable rise in loans for non-standard housing purchases. The Prime interest rate option is becoming more popular among borrowers, accounting for 26% of disbursements in September, up from 24% in August. Meanwhile, the weighted nominal interest rate on mortgages slightly decreased to 4.35% in September, remaining relatively low since early 2023.
In contrast to the lending boom, the housing market shows signs of weakness. Apartment sales in August were down 1% month-over-month, and year-to-date sales saw only a 2% increase. New apartment sales, particularly those sold at a discount, rose but their overall market share is limited. Second-hand apartment sales, which constitute the majority of transactions, have declined. The inventory of unsold new apartments stood at 85,700 in August, near a January peak, though the months of supply have slightly decreased.
Apartment prices fell by 0.6% in July, with an annual decline of 1.8%, most sharply in the Central District. Despite these recent drops, prices are still 5.5% higher than three years ago. The combination of high inventory and falling prices is expected to continue pressuring the real estate market. Overdue mortgage payments, while down from their peak, remain elevated, reflecting the impact of interest rate hikes on household repayment capacity.
